Slip Op. 00-37
UNITED STATES COURT OF INTERNATIONAL TRADE
TAIWAN SEMICONDUCTOR
INDUSTRY ASSOCIATION, ET AL.,
Plaintiffs,
and BEFORE: Pogue, Judge
MOTOROLA, INC., Court No. 98-05-01460
Plaintiff-Intervenor,
v.
UNITED STATES,
Defendant,
and
Micron Technology, Inc.
Defendant-Intervenor.
[The International Trade Commission’s determination on remand is
remanded.]
Decided: April 11, 2000
White & Case, LLP (Christopher F. Corr, Richard G. King, and Amy
E. Farrell) for Plaintiffs.
Lyn M. Schlitt, General Counsel; James A. Toupin, Deputy General
Counsel; Michael Diehl, Office of the General Counsel, U.S.
International Trade Commission, for Defendant.
Hale and Dorr LLP (Gilbert B. Kaplan, Michael D. Esch, Paul W.
Jameson, and Cris R. Revaz) for Defendant-Intervenor.
Court No. 98-05-01460 Page 2
OPINION
POGUE, Judge: On June 30, 1999, the Court remanded this matter
to the U.S. International Trade Commission ("Commission"). See
Taiwan Semiconductor Indus. Ass’n v. United States, 23 CIT , 59
F. Supp. 2d 1324 (1999)("Taiwan I").1 In that decision, the Court
reviewed Plaintiffs’ USCIT Rule 56.2 motion for judgment on the
agency record challenging the Commission’s final determination that
the industry in the United States producing static random access
memory semiconductors ("SRAMs") was materially injured by reason of
imports from Taiwan that were sold at less than fair value
("LTFV"). See id.
The Commission found in its final determination that "[t]he
domestic industry’s financial troubles [were] due in significant
part to the price depressing effects of the subject imports from
Taiwan on the domestic like product[.]" Static Random Access
Memory Semiconductors from the Republic of Korea and Taiwan, Inv.
Nos. 731-TA-761 & 762 (Final)(List 2, Doc. 395)(Apr. 9, 1998) at 37
("Final Determination").2 The Commission, however, did not
1
Familiarity with the Court’s previous decision is presumed.
2
List 1 consists of the documents within the public portion
of the record made before the Commission. List 2 consists of the
documents within the confidential portion of the same record.
Court No. 98-05-01460 Page 3
adequately explain how it avoided attributing to the subject
imports the harmful effects from other known sources of injury;
therefore, the Court remanded the determination to the Commission
for reconsideration consistent with the Court’s opinion. See
Taiwan I, 23 CIT at , 59 F. Supp. 2d at 1336. On remand, the
Commission again determines that the domestic industry was
materially injured by reason of LTFV imports of SRAMs from Taiwan.
See Commission’s Determ. on Remand (List 2, Doc. 406)(Aug. 30,
1999) at 1 ("Remand Determination").
In reviewing the Commission’s remand determination, this Court
is presented with the following issues: (1) whether the procedure
the Commission followed on remand was lawful; and (2) whether the
Commission’s remand determination that the domestic industry was
materially injured by reason of LTFV imports of SRAMs from Taiwan
is supported by substantial evidence and otherwise in accordance
with law.
Discussion
1. Did the Commission conduct its remand proceedings in
accordance with law?
Antidumping proceedings, including the Commission’s injury
determination under 19 U.S.C. § 1673d(b)(1994), "are investigatory
Court No. 98-05-01460 Page 4
in nature[,]" rather than adjudicatory in nature. See Statement of
Administrative Action, H.R. Doc. No. 316, 103rd Cong., 2nd Sess.
(1994), reprinted in Uruguay Round Agreements Act, Legislative
History, Vol. VI, at 892 ("SAA"); see also Grupo Industrial Camesa
v. United States, 18 CIT 461, 463, 853 F. Supp. 440, 442-43 (1994),
aff’d, 85 F.3d 1577 (Fed. Cir. 1996). As such, the provisions of
the Administrative Procedure Act ("APA") do not apply to the
Commission’s injury investigation. Cf. GSA, S.R.L. v. United
States, 24 CIT , , 77 F. Supp. 2d 1349, 1359 (1999); see also
19 U.S.C. § 1677c(b)(1994)("The [Commission’s] hearing shall not be
subject to the provisions of [5 U.S.C. §§ 551 et seq.], or to [5
U.S.C. § 702].").
After completing an investigation, the six commissioners
comprising the Commission, see 19 U.S.C. § 1330(a)(1994), vote on
whether the domestic industry has been injured by reason of the
subject imports. "If the Commissioners voting on [an injury]
determination . . . are evenly divided as to whether the
determination should be affirmative or negative, the Commission
shall be deemed to have made an affirmative determination." 19
U.S.C. § 1677(11)(1994). "[T]he Commission may function
notwithstanding vacancies." 19 U.S.C. § 1330(c)(6).
At the time of the original final determination regarding
Court No. 98-05-01460 Page 5
SRAMs from Taiwan, the Commission was only composed of three
members: Chairman Miller, Vice Chairman Bragg, and Commissioner
Crawford. See Final Determination at 3 n.1. Vice Chairman Bragg
found that the U.S. industry was materially injured by reason of
LTFV imports of SRAMs from Taiwan, with Chairman Miller dissenting.
See id. at 33 n.168. Commissioner Crawford, apparently, had
recused herself. See id. Thus, Vice Chairman Bragg’s decision
constituted an affirmative determination of the Commission pursuant
to 19 U.S.C. § 1677(11), and the publication of the Commission’s
final determination was entitled "Views of the Commission." See
Final Determination at 3. Accordingly, when the Court remanded, it
ordered the Commission to reconsider its affirmative determination,
without directing the remand to Vice Chairman Bragg alone. See
Taiwan I, 23 CIT at , 59 F. Supp. 2d at 1336.
By the time of the remand, three new members had been
appointed to the Commission: Commissioner Askey, Commissioner
Koplan, and Commissioner Hillman. In addition, then Vice Chairman
Bragg had become Chairman, and then Chairman Miller had become Vice
Chairman. Although the Commission was therefore composed of the
full six commissioners, only Chairman Bragg prepared views on
remand. See Remand Determination at 1 n.1. "The Commission, with
Commissioner Crawford not participating, submit[ted] Chairman
Court No. 98-05-01460 Page 6
Bragg’s remand views to the Court[] as its ’Views on Remand[.]’"
Id.; see also Action Jacket Approval Record, Pls.’ Resp. to Remand
Views, Ex. 1. Moreover, "[b]ecause Vice Chairman Miller’s
[dissent] was unaffected by the Court’s remand order, she did not
take part in this remand proceeding." See Remand Determination at
1 n.1.
Plaintiffs now argue that "[t]he remand determination was not
an institutional response, and therefore it was unlawful." Pls.’
Resp. to Remand Views at 2. According to Plaintiffs, the remand
determination only represents the views of Chairman Bragg, rather
than the views of the Commission as an institution. See id. at 9.
Because the applicable statute, case law, and this Court’s remand
order all compel an institutional response, Plaintiffs maintain,
all eligible commissioners should have participated in the
determination on remand. See id. at 2. Plaintiffs assert that
Vice Chairman Miller, Commissioner Koplan, Commissioner Askey, and
Commissioner Hillman did not participate in the remand proceeding.
See id. at 2.3
3
Plaintiffs do not appear to challenge Commissioner
Crawford’s non-participation. See Pls.’ Resp. to Remand Views at
2. The original and remand determinations merely indicate that
Commissioner Crawford did not participate in both decisions
without explaining why she was excused. See Final Determination
at 33 n.168; Remand Determination at 1 n.1. Nevertheless, both
Court No. 98-05-01460 Page 7
The plain language of the statute indicates that remands from
this court are indeed made to the Commission as a whole: "If the
final disposition of an action brought under this section is not in
harmony with the published determination of . . . the Commission,
the matter shall be remanded to the . . . Commission . . . for
disposition consistent with the final disposition of the court."
19 U.S.C. § 1516a(c)(3)(1994).
Likewise, this court has recognized the general rule that,
where possible, all sitting commissioners should participate in a
remand made to the Commission. See Trent Tube Div. v. United
States, 14 CIT 780, 784, 752 F. Supp. 468, 472 (1990)("[R]emands to
the Commission ordering explanations of the views of individual
members require an ’institutional response’ irrespective of the
makeup of the Commission’s membership at the time it receives
remand instructions."), aff’d, 975 F.2d 807, 814 (Fed. Cir.
1992)("[The CIT] was free, within reasonable limits, to set the
parameters of the remand, which required an institutional response
irrespective of flux in the Commission’s membership.");
Metallverken Nederland B.V. v. United States, 14 CIT 481, 490, 744
Plaintiffs and Defendant appear to agree that she had validly
recused herself and was therefore ineligible. See Pls.’ Resp. to
Remand Views at 2-3; Def.’s Resp. to Cmts. on Remand
Determination at 3.
Court No. 98-05-01460 Page 8
F. Supp. 281, 288 (1990)(recognizing that remands are generally to
the Commission as a whole)(citing 19 U.S.C. § 1516a(c)(3)(1988));
Asociacion Colombiana de Exportadores de Flores v. United States,
12 CIT 1174, 1176 n.2, 704 F. Supp. 1068, 1070 n.2
(1988)("[R]emands are made to the [Commission], not to the
individual commissioners. Where possible all commissioners should
participate in remand determinations."); USX Corp. v. United
States, 12 CIT 844, 845, 698 F. Supp. 234, 236 n.3
(1988)(indicating that a newly-appointed commissioner, not on the
Commission at the time of the original decision, should have
participated in the remand because "remand is made to the entire
Commission[;] [t]he Commission, rather than individual
commissioners, acts"); SCM Corp. v. United States, 2 CIT 1, 7, 519
F. Supp. 911, 915 (1981)("Clearly, the Commission, like this Court,
is a continuing institution, regardless of changes in its
membership.").
In addition, although the Court has the authority to remand
the individual views of specific commissioners, see, e.g., Nippon
Steel Corp. v. United States, 19 CIT 827, 827-28 (1995); Bando
Chemical Indus., Ltd. v. United States, 16 CIT 133, 137, 787 F.
Supp. 224, 227 (1992), aff’d, 26 F.3d 139 (Fed. Cir. 1994), in this
case, the Court ordered "the Commission" to reconsider its
Court No. 98-05-01460 Page 9
affirmative determination, instead of remanding the determination
to Chairman Bragg, the author of the Commission’s original majority
determination, alone. See Taiwan I, 23 CIT at , 59 F. Supp. 2d
at 1336. To be sure, the Court could have more specifically
instructed that its remand was directed to the entire Commission.
See Citrosuco Paulista, S.A. v. United States, 12 CIT 1196, 1231,
704 F. Supp. 1075, 1103 (1988)("This remand is directed to the
entire Commission, and not just individual commissioners.")(citing
Asociacion Colombiana, 12 CIT at 1176 n.2, 704 F. Supp. at 1070
n.2). Nevertheless, this Court has the authority to construe its
own remand order. See Laitram Corp. v. NEC Corp., 115 F.3d 947,
950-51 (Fed. Cir. 1997)(citing In re Sanford Fork & Tool Co., 160
U.S. 247, 256 (1895)).
Therefore, based on the relevant statutory provision, the case
law, and the Court’s remand order in Taiwan I, the Court agrees
with Plaintiffs that all eligible commissioners should have
participated in the remand. To prevail, however, Plaintiffs must
still satisfy their burden of demonstrating to the Court that all
the eligible commissioners did not meaningfully participate in the
remand.
The presumption of regularity supporting the acts of agency
officials mandates that, "in the absence of clear evidence to the
Court No. 98-05-01460 Page 10
contrary, courts presume that they have properly discharged their
official duties." United States v. Chemical Foundation, Inc., 272
U.S. 1, 14-15 (1926). Consistent with this principle, in United
States v. Morgan, 313 U.S. 409, 422 (1941), the Supreme Court held
that courts cannot probe the extent of an agency official’s
consideration and understanding of an issue in making a decision.
Subsequently, the Supreme Court has qualified Morgan to the limited
extent that a court may probe an agency official’s thought
processes if the challenger makes a "strong showing of bad faith or
improper behavior" on the part of the agency official, and the
agency has supplied the basis of its decision in formal findings.
See Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402,
420 (1971).
In applying these principles, federal courts have consistently
recognized that challengers must satisfy a high burden in order to
rebut the presumption that agency officials have adequately
considered the issues in making a final decision, including their
reading and understanding of the record evidence. See, e.g.,
Franklin Savings Ass’n v. Ryan, 922 F.2d 209, 211 (4th Cir.
1991)("Since Morgan, federal courts have consistently held that,
absent ’extraordinary circumstances,’ a government decision-maker
will not be compelled to testify about his mental processes in
Court No. 98-05-01460 Page 11
reaching a decision, ’including the manner and extent of his study
of the record[.]’")(citations omitted); Nat’l Small Shipments
Traffic Conference, Inc. v. ICC, 725 F.2d 1442, 1450 (D.C. Cir.
1984)("Because of the strong presumption of regularity in
administrative proceedings, reviewing courts will not normally
entertain procedural challenges that members of the body
inadequately considered the issues before reaching a final
decision[.]"); Nat’l Nutritional Foods Ass’n v. FDA, 491 F.2d 1141,
1144-46 (2d Cir. 1974); Grupo Industrial Camesa, 18 CIT at 463-64,
853 F. Supp. at 443.
Here, while the record does warrant concern, Plaintiffs have
not made the clear showing of misconduct required to rebut the
presumption of regularity. To prove that no commissioners other
than Chairman Bragg meaningfully participated in the remand,
Plaintiffs point to a footnote of the remand determination and to
the Commission Action Jacket Approval Record. See Pls.’ Resp. to
Remand Views at 10-11 (citing Remand Determination at 1 n.1 and
Action Jacket Approval Record, Ex. 1 to Pls.’ Resp. to Remand
Views).
The remand determination footnote states,
The views of Chairman Bragg comprised the Commission’s
determination in this investigation. The Commission,
with Commissioner Crawford not participating, submits
Court No. 98-05-01460 Page 12
Chairman Bragg’s remand views to the Court, as its "Views
on Remand" providing further explanation of the
Commission’s original determination in response to the
Court’s decision. Vice Chairman Miller reaffirms her
negative views in this investigation. Because Vice
Chairman Miller’s negative determination was unaffected
by this Court’s remand order, she did not take part in
this remand proceeding.
Remand Determination at 1 n.1.
Interpreting this footnote, Plaintiffs argue that the remand
determination did not constitute an institutional response from the
full Commission because Chairman Bragg alone prepared remand views.
See Pls.’ Resp. to Remand Views at 9-10. It is not necessary,
however, for each commissioner to participate in drafting the
decision or to submit individual views. Rather, the statute merely
requires a single, written determination from the Commission,
leaving to each commissioner’s discretion whether to prepare
separate or dissenting views. See 19 U.S.C. §§ 1673d(d),
1677(7)(B); cf. H.R. Rep. No. 96-317, 96th Cong., 1st Sess. at 46
(1979)("[T]he Committee [on Ways and Means] intends that the
[Commission] determination, as well as any dissenting or separate
views of the individual Commissioners, be specific in its statement
of findings of fact and conclusions of law."). Accordingly, it is
appropriate for commissioners to adopt one another’s views. Cf.
Hannibal Indus., Inc. v. United States, 13 CIT 202, 203, 710 F.
Court No. 98-05-01460 Page 13
Supp. 332, 334 (1989)("On remand, the Chairman adopted the Vice
Chairman’s views on causation and her finding of no material
injury.").
The remand determination footnote states, "The Commission,
with Commissioner Crawford not participating, submits Chairman
Bragg’s remand views to the Court, as its ’Views on Remand[.]’"
Remand Determination at 1 n.1 (emphasis added). In this light, it
appears that newly-appointed commissioners Askey, Koplan, and
Hillman adopted Chairman Bragg’s remand views. Employing the
presumption of regularity in agency decision making, the Court
presumes that commissioners Askey, Koplan, and Hillman would not
have chosen to adopt Chairman Bragg’s views as the views of the
Commission without an adequate consideration of the issues and the
record evidence. Therefore, they presumably participated in the
remand determination.
At the same time, the remand determination footnote states
that Vice Chairman Miller reaffirmed her dissent. See id. The
last sentence of the footnote, however, calls Vice Chairman
Miller’s participation into question, as it states that "she did
not take part in this remand proceeding." Id. Nevertheless, this
tension in language does not clearly indicate that Vice Chairman
Miller did not participate in the remand. Employing the
Court No. 98-05-01460 Page 14
presumption of regularity in interpreting the entire footnote, we
conclude that Miller’s continued dissent constituted participation,
as it indicates that she considered the merits of the decision.
Therefore, reviewing the remand determination footnote, the Court
must presume that Vice Chairman Miller meaningfully took part in
the remand proceeding.
Similarly, the Commission Action Jacket Approval Record does
not undermine the presumption that all eligible commissioners
meaningfully participated in the remand determination. The Action
Jacket Approval Record is simply a sheet of paper indicating that
each commissioner, with the exception of Commissioner Crawford,
approved the remand views drafted by Chairman Bragg. See Action
Jacket Approval Record, Pls.’ Resp. to Remand Views, Ex. 1.
Plaintiffs argue,
The vote sheet shows that neither Vice Chairman Miller
nor any of the other three qualified sitting
Commissioners adopted the remand determination as their
own or reviewed the record evidence to respond to the
Court’s Order, let alone participated in any analysis on
remand. The vote sheet shows that the other
Commissioners merely approved of the procedural maneuver
whereby only one Commissioner’s views were submitted in
response to the Court’s remand Order.
Pls.’ Resp. to Remand Views at 10. Plaintiffs, however, make
inferences that this Court will not make. Rather, absent hard
evidence to the contrary, the Court must presume that the
Court No. 98-05-01460 Page 15
commissioners would not have approved submitting to the Court the
remand views prepared by Chairman Bragg without an understanding of
the determination’s merits.4
The Court recognizes that Vice Chairman Miller wrote on the
vote sheet, "I note for the record that I would have preferred an
institutional response to this remand." Action Jacket Approval
Record, Pls.’ Resp. to Remand Views, Ex. 1 (emphasis added). This
statement does raise flags. Nevertheless, considered in
conjunction with the remand determination’s pronouncement that the
Commission submitted Chairman Bragg’s views as the Commission’s
"Views on Remand" and with each commissioner’s recorded approval on
the vote sheet, Vice Chairman Miller’s statement does not rise to
the level of "a clear showing of misconduct or wrongdoing"
necessary to override the presumption of regularity. See Franklin
Savings Ass’n, 922 F.2d at 211.
On this record, it is not clear that the Commission on remand
4
The Court notes that the Action Jacket Approval Record
indicates that Vice Chairman Miller also approved the remand
views drafted by Chairman Bragg. This seems inconsistent with
the remand determination’s indication that Miller maintained her
dissent. See Remand Determination at 1 n.1. Interpreting the
evidence as a whole, however, the Court must presume that Vice
Chairman Miller approved submitting to the Court the remand views
of Chairman Bragg as the Commission’s remand determination
because the draft noted her dissent. Seen in this light, there
is no inconsistency.
Court No. 98-05-01460 Page 16
did not conduct a formal re-vote on the merits. It may be that
Plaintiffs’ concerns are justified, and that the deliberations did
not include all of the sitting Commissioners as contemplated by the
statute. But the Court will not presume misconduct based on
suspicion alone. The evidence does not clearly show that the full
Commission did not meaningfully participate in the remand in
accordance with 19 U.S.C. § 1516a(c)(3), the case law, and this
Court’s remand order.5 Finally, we note that, because we are
5
Plaintiffs offer additional arguments in support of their
belief that the Commission’s proceedings on remand violated the
spirit of the Court’s remand order. See Pls.’ Resp. to Remand
Views at 11-14. In reviewing Plaintiffs’ arguments, the Court
notes that "[t]he Commission has broad discretion in fashioning
its procedures." Metallverken, 14 CIT at 490, 744 F. Supp. at
288 (citing FCC v. Pottsville Broadcasting Co., 309 U.S. 134, 143
(1940)). Moreover, as discussed above, the presumption of
regularity dictates that, "in the absence of clear evidence to
the contrary, courts presume that [agency officials] have
properly discharged their official duties." Chemical Foundation,
272 U.S. at 14-15.
Plaintiffs first argue that the Commission failed to provide
public notice of its remand proceeding. See Pls.’ Resp. to
Remand Views at 11. Such notice was unnecessary, however, as the
Court’s previous opinion notified the parties of the remand. See
Taiwan I, 23 CIT at , 59 F. Supp. 2d at 1336-37.
Plaintiffs next argue that the Commission failed to "offer
interested parties an opportunity to be heard[.]" Pls.’ Resp. to
Remand Views at 11. As mentioned above, however, antidumping
proceedings are investigatory, rather than adjudicatory, in
nature. See SAA at 892; see also NEC Corp. v. United States, 21
CIT 933, 948-49, 978 F. Supp. 314, 329 (1997). Accordingly, the
Commission permissibly interprets its role in conducting an
investigation as fact-finding. See U.S. Int’l Trade Comm’n,
Guidelines for Hearings, Pub. 3183, at 1 (Mar. 1999). In
Court No. 98-05-01460 Page 17
remanding the decision for the reasons explained below, Plaintiffs
will, in any event, be afforded the full Commission’s
reconsideration of the merits of the injury determination.
2. Is the Commission’s remand determination supported by
substantial evidence and otherwise in accordance with law?
The Court must sustain the Commission’s remand determination
unless it is "unsupported by substantial evidence on the record, or
otherwise not in accordance with law." 19 U.S.C. §
1516a(b)(1)(B)(i).
A. Background
The statute directs the Commission to "make a final
remanding this matter, the Court did not order the Commission to
reopen the record for the gathering of further evidence. See
Taiwan I, 23 CIT at , 59 F. Supp. 2d at 1336-37. Therefore,
it was within the Commission’s discretion not to solicit further
comments from interested parties on remand.
Finally, Plaintiffs argue that the Commission improperly
refused to permit briefs and exhibits that Plaintiffs had
previously submitted to this Court to be added to the record of
the remand proceeding. See Pls.’ Views on Remand at 11, 12-13.
As noted, however, the Court did not instruct the Commission to
reopen the record. Moreover, Plaintiffs’ case briefs presumably
contained arguments that the Commission had already heard. See
28 U.S.C. § 2637(d)(requiring the exhaustion of administrative
remedies). Lastly, because the exhibits Plaintiffs presented at
oral argument before this Court on May 26, 1999, were merely
charts constructed using data already on the record, it was
within the Commission’s discretion to decide whether to receive
them. See Maine Potato Council v. United States, 9 CIT 293, 300,
613 F. Supp. 1237, 1244 (1985)("It is within the Commission’s
discretion to make reasonable interpretations of the
evidence[.]").
Court No. 98-05-01460 Page 18
determination of whether . . . an industry in the United States .
. . is materially injured . . . by reason of [the subject]
imports[.]" 19 U.S.C. § 1673d(b). "The term ’material injury’
means harm which is not inconsequential, immaterial, or
unimportant." 19 U.S.C. § 1677(7)(A). Moreover, the "by reason
of" language "mandates a showing of causal--not merely temporal--
connection between the [subject imports] and the material injury."
Gerald Metals, Inc. v. United States, 132 F.3d 716, 720 (Fed. Cir.
1997). In turn, the causation standard "requires adequate evidence
to show that the harm occurred ’by reason of’ the [subject]
imports, not by reason of a minimal or tangential contribution to
material harm[.]" Id. at 722.6
In examining "whether [the subject] imports have caused
6
Following the Federal Circuit’s decision in Gerald Metals,
132 F.3d 716, this Court ordered the Commission to reconsider its
affirmative material injury determination concerning imports of
pure magnesium from the Ukraine. See Gerald Metals, Inc. v.
United States, 22 CIT , 8 F. Supp. 2d 861 (1998). This Court
then sustained the Commission’s subsequent remand determination.
See Gerald Metals, Inc. v. United States, 22 CIT , 27 F. Supp.
2d 1351 (1998), appeal dismissed for appellant’s failure to
prosecute in accordance with Federal Circuit Rule 31(a), No. 99-
1166 (Fed. Cir. Apr. 16, 1999). Although in Gerald Metals the
Federal Circuit and this Court interpreted the statute as it
existed prior to the enactment of the Uruguay Round Agreements
Act ("URAA") on January 1, 1995, the "by reason of" standard
articulated therein applies to the amended statute. See Taiwan
I, 23 CIT at , 27 F. Supp. 2d at 1329.
Court No. 98-05-01460 Page 19
material injury to a domestic industry," the Commission is required
under 19 U.S.C. § 1677(7)(B) to consider three factors: (1) the
volume of the subject imports; (2) the effect of the subject
imports on prices of domestic like products; and (3) the impact of
the subject imports on domestic producers of like products.7 Id.
at 719. The Commission evaluates the volume and price effects of
the subject imports and their consequent impact on the domestic
industry by applying the standards set forth in 19 U.S.C. §
1677(7)(C).8 See U.S. Steel Group v. United States, 96 F.3d 1352,
7
In addition, the Commission "may consider such other
economic factors as are relevant to the determination regarding
whether there is material injury by reason of imports." 19
U.S.C. § 1677(7)(B)(ii).
8
The relevant portions state:
(i) Volume
In evaluating the volume of imports of
merchandise, the Commission shall consider whether
the volume of imports of the merchandise, or any
increase in that volume, either in absolute terms
or relative to production or consumption in the
United States, is significant.
(ii) Price
In evaluating the effect of imports of such
merchandise on prices, the Commission shall
consider whetherB
(I) there has been significant price
underselling by the imported merchandise
Court No. 98-05-01460 Page 20
as compared with the price of like
products of the United States, and
(II) the effect of imports of such
merchandise otherwise depresses prices to
a significant degree or prevents price
increases, which otherwise would have
occurred, to a significant degree.
(iii) Impact on affected domestic industry
In examining the impact required to be considered
under subparagraph (B)(i)(III), the Commission
shall evaluate all relevant economic factors which
have a bearing on the state of the industry in the
United States, including, but not limited toB
(I) actual and potential decline in
output, sales, market share, profits,
productivity, return on investments, and
utilization of capacity,
(II) factors affecting domestic prices,
(III) actual and potential negative
effects on cash flow, inventories,
employment, wages, growth, ability to
raise capital, and investment,
(IV) actual and potential negative
effects on the existing development and
production efforts of the domestic
industry, including efforts to develop a
derivative or more advanced version of
the domestic like product, and
(V) in a proceeding under [19 U.S.C. §§
1673-1673h], the magnitude of the margin
of dumping.
The Commission shall evaluate all relevant
economic factors described in this clause within
the context of the business cycle and conditions
of competition that are distinctive to the
Court No. 98-05-01460 Page 21
1360 (Fed. Cir. 1996); see also Agreement on Implementation of
Article VI of the General Agreement on Tariffs and Trade 1994
(Antidumping) at Art. 3.1 ("Antidumping Agreement").
"Thus, after assessing whether the volume, price effects, and
impact of the subject imports on the domestic industry are
significant, the statutory ’by reason of’ language implicitly
requires the Commission to ’determine whether these factors as a
whole indicate that the [subject] imports themselves made a
material contribution to the injury.’"9 Taiwan I, 23 CIT at ,
59 F. Supp. 2d at 1327-28 (quoting Gerald Metals, 22 CIT at , 27
F. Supp. 2d at 1355); see also 19 U.S.C. § 1673d(b)(1).
Accordingly, "the Commission must examine other factors to ensure
that it is not attributing injury from other sources to the subject
imports." SAA at 851-52.10
affected industry.
19 U.S.C. § 1677(7)(C).
9
The presence or absence of any factor is not necessarily
dispositive to a finding of material injury. See 19 U.S.C. §
1677(7)(E)(ii). The Commission has discretion to weigh the
significance of each factor in light of the circumstances. See
Iwatsu Electric Co., Ltd. v. United States, 15 CIT 44, 49, 758 F.
Supp. 1506, 1510-11 (1991).
10
In its remand determination, the Commission suggests that
the non-attribution requirement is satisfied by assuring that the
injurious effects ascribed to the subject imports are not
Court No. 98-05-01460 Page 22
"effects entirely caused" by other factors. Remand Determination
at 9 n.34. In making this assertion, the Commission quotes an
isolated sentence from the GATT 1947 Panel Report in the
Norwegian Salmon case. See Imposition of Anti-dumping Duties on
Imports of Fresh and Chilled Atlantic Salmon from Norway, Apr.
27, 1994, GATT B.I.S.D. (41st Supp.) at 423 ("Norwegian Salmon").
The SAA endorses Norwegian Salmon as illustrative of a proper
causation analysis. See SAA at 851.
Without more, however, a reliance on this isolated statement
from Norwegian Salmon is misplaced. First, the GATT Panel’s
statement that it could not find that the Commission "had
attributed to the Norwegian imports effects entirely caused by"
other factors was made in direct response to Norway’s argument
that "any material injury to the [United States] Atlantic salmon
industry . . . was caused by factors other than imports from
Norway[.]" Norwegian Salmon at 423 (emphases added).
Second, this interpretation of the SAA’s non-attribution
requirement could render the statutory "by reason of" language
meaningless. The statute’s "by reason of" language indicates
that the Commission cannot satisfy "its burden of proof by
showing that the LTFV goods themselves contributed only minimally
or tangentially to the material harm." Gerald Metals, 132 F.3d
at 722 (emphasis added). To conclude that non-attribution merely
requires the Commission to ensure that it does not attribute to
the subject imports injury caused entirely by other factors,
however, could allow the Commission to violate this language
because overall injury to a domestic industry is often caused by
a variety of factors. As explained by this Court,
Frequently, several events--each of which is a
necessary antecedent and has an appreciable effect--
contribute to overall injury to an industry. In some
cases, another event may have such a predominant effect
in producing the harm as to make the effect of the LTFV
imports insignificant and, therefore, to prevent the
LTFV imports from being a material factor. (This is
not to say, however, that there may not be more than
one material factor to injury.) In addition, even if
no contributing factors independently have a
predominant effect, their combined effect may dilute
the effect of the LTFV imports, preventing the LTFV
Court No. 98-05-01460 Page 23
In reviewing the Commission’s original determination, the
Court could not discern how the Commission ensured that it did not
attribute the harmful effects from other recognized factors to the
subject imports. See Taiwan I, 23 CIT at , 59 F. Supp. 2d at
1335-36. Therefore, the Court remanded the Commission’s
affirmative injury determination for "reconsideration consistent
with this Court’s opinion." Id. at , 59 F. Supp. 2d at 1336.
On remand, the Commission again determines that the industry in the
United States producing SRAMs was materially injured by reason of
imports of SRAMs from Taiwan that the Department of Commerce found
were sold at LTFV. See Remand Determination at 1.
B. Volume Effects
The statute requires the Commission to determine "whether the
imports from being a material factor. The statute
requires that the Commission determine whether the LTFV
imports themselves made a material contribution to the
injury suffered by the domestic industry.
Gerald Metals, 22 CIT at , 27 F. Supp. 2d at 1355 n.8.
"That the injurious effects from other sources may be
greater than the effect of the subject imports is not
determinative, [however,] so long as the Commission reasonably
finds that the subject imports’ contribution to the overall harm
is material." Taiwan I, 23 CIT at , 59 F. Supp. 2d at 1330-
31. "[T]he Commission need not weigh (i.e., determine which is
greater or lesser) causes in complying with the ’by reason of’
standard." Id. at , 59 F. Supp. 2d at 1331.
Court No. 98-05-01460 Page 24
volume of [the subject imports], or any increase in that volume,
either in absolute terms or relative to production or consumption
in the United States, is significant." 19 U.S.C. §
1677(7)(C)(i)(emphasis added). "’This language when read in
conjunction with the legislative history indicates that disjunctive
language was chosen to signify congressional intent that the agency
be given broad discretion to analyze import volume in the context
of the industry concerned.’" USX Corp., 12 CIT at 848, 698 F.
Supp. at 238 (1988)(quoting Copperweld Corp. v. United States, 12
CIT 148, 167, 682 F. Supp. 552, 570 (1988)); see also S. Rep. No.
96-249, 96th Cong., 1st Sess. at 88 (1979).
In its original determination, the Commission evaluated the
significance of the subject imports’ volume in both absolute and
relative terms, without indicating whether its determination relied
upon both findings. See Final Determination at 33-34. In Taiwan
I, the Court sustained the Commission’s finding that the subject
imports’ nearly threefold increase in absolute volume was
significant. See Taiwan I, 23 CIT at , 59 F. Supp. 2d at 1331.
The Court could not, however, "sustain the Commission’s additional
conclusion that the subject imports’ increase relative to U.S.
consumption was significant." Id. The record evidence indicated
that non-subject imports of SRAMs greatly exceeded the imports of
Court No. 98-05-01460 Page 25
Taiwanese SRAMs in terms of both absolute and relative increases in
volume11 and were recognized by the Commission as a potential source
of injury to the domestic industry. See id. at , 59 F. Supp.
2d at 1331-32. Therefore, "without an explanation of how the
relatively small volume of Taiwanese imports was significant given
the dominant presence of non-subject imports," the Court could not
sustain the Commission’s additional conclusion that the subject
imports’ increase relative to U.S. consumption was significant.
Id. at , 59 F. Supp. 2d at 1332.
On remand, the Commission clarifies that its determination was
not dependent on its finding of relative significance; rather, its
finding that the absolute increase in subject imports was
significant alone supported its determination regarding the volume
factor. See Remand Determination at 5. As mentioned, the Court
previously held that substantial evidence supported the
Commission’s conclusion that the absolute increase in imports of
Taiwanese SRAMs was significant. See Taiwan I, 23 CIT at , 59
F. Supp. 2d at 1331. Therefore, recognizing that the Commission
has discretion to analyze the volume of subject imports in either
11
Throughout the period of investigation, non-subject
imports maintained a much higher U.S. market share than Taiwanese
imports. See Staff Report (List 2, Doc. 34) at IV-9, Table IV-4
("Staff Report").
Court No. 98-05-01460 Page 26
an absolute or relative sense, the Court sustains the Commission’s
conclusion that the overall volume of subject imports was
significant as supported by substantial evidence.12
12
Because substantial evidence supports the Commission’s
conclusion that the volume of the subject imports was significant
based on its determination regarding absolute volume alone, the
Court need not address the Commission’s additional determination
regarding the imports’ relative volume. Nevertheless, the Court
notes an argument raised by the Commission on remand in
connection with the Court’s prior instruction for the Commission
to explain "how the relatively small volume of Taiwanese imports
was significant given the dominant presence of non-subject
imports[.]" Taiwan I, 23 CIT at , 59 F. Supp. 2d at 1332.
Addressing the Court’s instruction, the Commission states,
The Norwegian Salmon panel holds that there is "not . .
. a requirement that imports from third countries not
subject to investigation be considered as part of an
examination of the significance of an increase in the
volume of imports from a country whose imports [are]
the subject of an anti-dumping duty investigation."
Remand Determination at 4 (citing Norwegian Salmon at 406).
Thus, the Commission argues that a comparison of the respective
volumes of the Taiwanese and non-subject imports was not required
to evaluate the significance of the Taiwanese imports’ relative
volume.
If the Commission evaluates the significance of the subject
imports without regard to causation, such a comparison may indeed
not be necessary. Cf. Angus Chemical, 140 F.3d 1478, 1485 (Fed.
Cir. 1998)(indicating that, under a two-step method of causation,
the statutory factors of 19 U.S.C. § 1677(7)(B) may be evaluated
before conducting "the additional analytical step of determining
the precise causal connection between the imports and any
perceived harm to the industry"). But see Taiwan I, 23 CIT at
, 59 F. Supp. 2d at 1332 n.12.
In determining the ultimate issue of causation, however, it
may be necessary to consider large volumes of non-subject
imports. The SAA specifically endorses the causation standard
Court No. 98-05-01460 Page 27
C. Price Effects
1. Introduction
The statute provides that, in evaluating the effect of the
subject imports on domestic prices,
[T]he Commission shall consider whether--(I) there has
been significant price underselling by the imported
merchandise as compared with the price of domestic like
products of the United States, and (II) the effect of
imports of such merchandise otherwise depresses prices to
a significant degree or prevents price increases, which
otherwise would have occurred, to a significant degree.
19 U.S.C. § 1677(7)(C)(ii).
The Court previously sustained as supported by substantial
evidence the Commission’s conclusion that there was significant
price underselling by the Taiwanese imports. See Taiwan I, 23 CIT
employed in Norwegian Salmon. See SAA at 851. In the sentence
immediately following the Commission’s above quote, the GATT
panel states, "A consideration of the volume of imports from . .
. third countries might be relevant for the purpose of
determining the existence of a causal relationship between the
allegedly dumped imports under investigation and material injury
to a domestic industry." Norwegian Salmon at 406. Moreover, the
Antidumping Agreement explicitly states,
The authorities shall also examine any known factors
other than the dumped imports which at the same time
are injuring the domestic industry, and the injuries
caused by these other factors must not be attributed to
the dumped imports. Factors which may be relevant in
this respect include . . . the volume and prices of
imports not sold at dumping prices . . . .
Antidumping Agreement at ¶ 3.5 (emphasis added).
Court No. 98-05-01460 Page 28
at , 59 F. Supp. 2d at 1333. The Court could not, however,
sustain the Commission’s conclusion that the Taiwanese imports had
significant price depressing effects during 1996 and 1997 as
supported by substantial evidence.13 See id. at , 59 F. Supp.
2d at 1333-36.
First, the Court expressed concern that "the Commission found
that the subject imports had significant price depressing effects
despite the fact that the record indicate[d] that during 1996 and
1997 the majority of the Taiwanese imports oversold the domestic
product." Taiwan I, 23 CIT at , 59 F. Supp. 2d at 1333. The
Commission collected price information for six SRAM products,
designating them products 1 through 6. Newer Taiwanese products 1
and 2, which accounted for less than 25% of Taiwanese imports in
1996 and less than 33% in 1997, significantly undersold the
equivalent domestic products during 1996 and 1997. See Staff
Report at V-6 to V-8, Tables V-1 and V-2. Older Taiwanese products
3 and 5, however, accounted for over 50% of Taiwanese imports in
1996 and over 67% in 1997, and generally oversold the equivalent
13
The years 1994 through 1997 encompass the period of
investigation. Nevertheless, the Commission permissibly focuses
on the more recent 1996-97 period in evaluating the causal
effects of the subject imports. See, e.g., Chr. Bjelland
Seafoods A/S v. United States, 19 CIT 35, 48 (1995).
Court No. 98-05-01460 Page 29
domestic products during those years. See id. at V-9 to V-10,
Table V-3, and at V-13 to V-14, Table V-5.
Second, the Court could not discern how the Commission ensured
that it did not attribute the harmful effects from other recognized
sources of price depression in the U.S. SRAM market to the subject
imports. See Taiwan I, 23 CIT at , 59 F. Supp. 2d at 1335-36;
see also SAA at 851-52. In the original determination, the
Commission acknowledged that a learning curve, oversupply, and non-
subject imports also had price depressing effects on the prices of
domestic SRAMs. See Final Determination at 35, 37. Yet the
Commission simply concluded that the subject imports themselves had
significant price depressing effects without explaining the basis
for that conclusion, despite the extensive evidence of these other
known sources of price depression. See Taiwan I, 23 CIT at , 59
F. Supp. 2d at 1336.
The Commission’s remand determination attempts to address the
Court’s concerns.
2. Analysis
a) Price Depressing Effects of Taiwanese SRAM Imports
On remand, the Commission continues to focus on the newer
products 1 and 2, but now offers a more thorough explanation of
their unique importance. See Remand Determination at 12-13. The
Court No. 98-05-01460 Page 30
Commission explains that "the health of the industry depends upon
its success in new products" because, "in the initial period of
selling a more advanced version or new generation of a product,
firms enjoy a price premium." Id. (citing Final Determination at
22). Therefore, the Commission reasons, the substantial
underselling by Taiwanese imports in newer products 1 and 2 took on
even greater importance because it impaired the domestic industry’s
ability to charge expected premium prices. See id.
Regarding product 1, the Commission states, "In the first nine
months after the entry of Taiwan imports into the market for
Product 1 [in April of 1995], the Taiwan price fell to about half
of its original value, maintaining a margin generally about 40
percent below the U.S. price." Id. (citing Staff Report at V-6 to
V-7, Table V-1). Over the course of the following three months,
the Commission elaborates, the price declines of Taiwanese product
1 became "even more radical," falling to less than one-third of its
December 1995 unit price in February 1996. See id. at 12-13
(citing Staff Report at V-6 to V-7, Table V-1). Throughout this
overall period, "[d]omestic prices fell precipitously." Id. at 13
(citing Staff Report at V-6 to V-7, Table V-1). The record
supports the Commission’s assertions regarding the pricing of
product 1. See Staff Report at V-6 to V-7, Table V-1. Therefore,
Court No. 98-05-01460 Page 31
based on the record, a reasonable mind could conclude, as did the
Commission, that the significant underselling of Taiwanese product
1 depressed U.S. prices.
The Commission characterizes the pricing of Taiwanese product
2 as "even more stark[.]" Remand Determination at 13. The
Commission notes that Taiwanese imports of product 2 entered the
United States two months after the U.S. industry had introduced the
product and "at a price that was one-seventh the domestic product
price." Id. (citing Staff Report at V-8, Table V-2). The domestic
product price fell by almost two-thirds during the following three
months and "declined further by the end [of 1997]." Id. (citing
Staff Report at V-8, Table V-2). Throughout this period, the
Commission continues, Taiwanese product 2 consistently undersold
the domestic product. Id. (citing Staff Report at V-8, Table V-2).
The record supports these assertions. See Staff Report at V-8,
Table V-2. Therefore, based on the record, a reasonable decision
maker could conclude, as did the Commission, that the significant
underselling of Taiwanese product 2 depressed U.S. prices.
In addition, the Commission explains on remand that the more
established Taiwanese products 3 and 5 also had price depressing
effects, despite the fact that these products exhibited "mixed
Court No. 98-05-01460 Page 32
overselling and underselling in 1996-97."14 See Remand
Determination at 14-15. Addressing product 3, the Commission
explains, citing another investigation, "’in a commodity market
characterized by intense price-based competition, a mixed pattern
of under- and overselling is to be expected; such a pattern,
together with increasing volume of subject imports, indicates that
subject imports played a substantial role in the price declines .
. . .’" Id. at 15 (citing Certain Stainless Steel Plate from
Belgium, Canada, Italy, Korea, South Africa, and Taiwan, Inv. Nos.
701-TA-376, 377, and 379 (Final) and Inv. Nos. 731-TA-788-793
(Final), USITC Pub. 3188, at 19 (May 1999)).
Applying this observation to the current case, the Commission
concludes that Taiwanese product 3 had price depressing effects
because its volume increased and it "undersold the domestic product
in between one-quarter and one-third of comparisons" in 1996-97.
Id. at 15 (citing Staff Report at V-9, Table V-3). The record,
however, also supports the opposite conclusion. Margins of
Taiwanese overselling and underselling in product 3 fluctuated
14
Taiwanese product 3 oversold the domestic product 3 in
seven months of 1996 and in ten months of 1997. See Staff Report
at V-10, Table V-3. Taiwanese product 5 oversold the domestic
product 5 in seven months of 1996 and in eight months of 1997.
See id. at V-14, Table V-5.
Court No. 98-05-01460 Page 33
substantially over 1996 and 1997, yet domestic product 3 prices
declined fairly steadily and consistently over this period. See
Staff Report at V-10, Table V-3. Thus, an analysis of the causal
nexus between Taiwanese pricing of product 3 and the domestic
product 3 price declines requires an interpretation of the
evidence. The Commission has "discretion to make reasonable
judgments and inferences in interpreting evidence[.]" Chung Ling
Co., Ltd. v. United States, 16 CIT 843, 846, 805 F. Supp. 56, 61
(1992)(citing Maine Potato Council, 9 CIT at 300, 613 F. Supp. at
1244).
Moreover, we need not belabor whether substantial evidence
supports the Commission’s conclusion regarding the effects of
Taiwanese product 3; the Commission’s explanation of Taiwanese
product 5's effects adequately addresses the Court’s previous
concern regarding the Commission’s finding of significant price
depressing effects despite the fact that the majority of the
Taiwanese imports oversold the domestic product during 1996-97.
Regarding product 5, the Commission explains, "In analyzing
the effects of subject imports on domestic prices of Product 5,
confirmed lost revenue findings are more probative than
underselling." Remand Determination at 15. The Commission points
out that a "substantial number of lost revenue allegations for
Court No. 98-05-01460 Page 34
[product 5] were confirmed[,]" dating from the fourth quarter of
1995 through 1997. Id. at 15-16 (citing Staff Report at V-24 to V-
28, Table V-8). Based on the evidence of confirmed lost revenue
allegations, the Commission concludes that U.S. producers had to
"significantly lower[] their prices to avoid losing sales to
[Taiwanese product 5]." Id. at 16. Also with regard to product 5,
the Commission notes "that there is no possibility of false
attribution of [price] effects where allegations of losses due to
Taiwan imports have been confirmed." Id.
The record indicates that only one U.S. SRAM producer made the
lost revenue allegations concerning Taiwanese product 5. See Staff
Report at V-24 to V-28, Table V-8. Moreover, all but one of the
confirmed lost revenue allegations involved the same purchaser.
See id. Nevertheless, the confirmed lost revenue allegations are
at least reasonably indicative of price depression; in each case,
the U.S. producer lowered its initial price to avoid losing a sale
to Taiwanese imports of product 5. See id.
Accordingly, substantial evidence supports the conclusion that
the subject imports as a whole generally had price depressing
effects. The precise issue, however, is whether the price
depressing effects were "significant." See 19 U.S.C. §
1677(7)(C)(ii).
Court No. 98-05-01460 Page 35
b) Other Sources of Price Depression
In examining causation, the Commission must not attribute the
harmful effects from other sources of injury to the subject
imports. See SAA at 851-52. The Commission further bases its
remand determination that the subject imports themselves had
significant price depressing effects on its explanation of how it
ensured that it did not attribute the price effects from the other
recognized factors (i.e., the learning curve, non-subject imports,
and the 1996-97 oversupply) to the subject imports.
i) The Learning Curve
The learning curve is the phenomenon by which a firm’s
manufacturing costs, and hence its prices, decrease as it becomes
more efficient in production. See Final Determination at 22. The
record indicates that "SRAM prices historically show a pattern of
steep price declines as the products move along market and
production life cycles." Staff Report at I-20 and V-1. Addressing
the effect of the learning curve on the domestic prices for newer
products 1 and 2, the Commission states, "Although the Commission
did not adopt a fixed rate for the learning curve, the evidence
before the Commission indicated that this process is more gradual
than the precipitous falls in new-product prices that occurred
during the later part of the POI." Remand Determination at 14.
Court No. 98-05-01460 Page 36
The record evidence concerning the learning curve effect in
the SRAM industry indicates that the price per bit falls
approximately 38% every two years. See Staff Report at V-1; Feb.
18, 1998, Hearing Tr. (List 1, Doc. 252) at 37 ("Hearing Tr.").
Domestic product 1 and 2 price declines over 1996 and 1997 were
indeed faster than this rate. See Staff Report at V-6 to V-8,
Tables V-1 and V-2. Therefore, substantial evidence supports the
Commission’s conclusion that the price depressing effects of the
learning curve did not render the price depressing effects of the
subject imports insignificant. The Commission has adequately
explained how it ensured that it did not attribute the price
depressing effects of the learning curve to the Taiwanese imports.
ii) Non-Subject Imports
Regarding the non-subject imports, the Commission appears to
explain that it did not attribute price depressing effects of non-
subject imports to the Taiwanese imports because the non-subject
imports were not as competitive as the Taiwanese and domestic
product in the U.S. market for fast SRAMs.15 The Commission
explains,
15
By inference, it appears the Commission considers "slow"
SRAMs to be SRAMs of access speeds greater than or equal to 55
nanoseconds ("ns"), while it considers "fast" SRAMs to be those
of access speeds less than or equal to 34 ns.
Court No. 98-05-01460 Page 37
[M]ore than half of the increase by quantity in non[-]
subject imports in 1996-1997 came in imports from
countries whose imports are predominantly concentrated in
slower access speeds. In contrast, Taiwan imports, like
domestic industry shipments, are heavily concentrated in
higher access speeds. Of non[-]subject imports, only
non-subject Korean imports are more concentrated in the
market for fast SRAMs than in the market for slow SRAMs.
Although the record does not indicate exactly in which
SRAM products non[-]subject imports as a whole increased
most, the market share of non-LTFV products from sources
heavily concentrated in the slower range gained market
share . . . from 1995 to 1997. In contrast, the market
share of non-subject Korean imports decreased slightly[.]
Remand Determination at 9 (citing Staff Report at IV-3, Table IV-2,
at I-10, Table I-1, and at IV-9, Table IV-4).16
Based on these findings, the Commission infers that, "in the
part of the market in which the U.S. and Taiwan products
compete[d], non[-]subject imports [did not have a] greater effect
than subject imports." Id. at 9. Instead, "[n]onsubject imports
appear to have had their greatest effects in [the market for slow
16
The non-subject imports as a whole were composed of non-
subject imports from Korea and non-subject imports from all other
countries, particularly Japan. See Staff Report at II-13.
Henceforth, the Court will refer to the non-subject imports from
all other countries as "third source" imports. The record
indicates that, in 1997, 58.4% of non-subject Korean imports were
in the fast range and 43.1% of third source imports were in the
fast range. See Staff Report at I-10, Table I-1. As indicated
in the above quote, the Commission characterizes the third source
imports as "imports from countries whose imports are
predominantly concentrated in slower access speeds." Remand
Determination at 9.
Court No. 98-05-01460 Page 38
SRAMs] in which Taiwan imports compete[d] very little and which
represent[ed] a relatively low portion of shipments by the U.S.
industry." Id. at 9-10. Thus, the Commission suggests that it did
not attribute price depressing effects of non-subject imports to
the Taiwanese imports because the non-subject imports were less
competitive than the Taiwanese product in the U.S. market for fast
SRAMs. See also id. at 10 n.41 ("That non[-]subject imports
excluded subject imports and domestic products from [a part of the
market] would set the stage for more intense competition between
subject imports and domestic product in the part of the market open
to them.") and 17. n.76 (stating that the Commission explained in
its discussion of the relative volume of subject imports how it
ensured "that it was not attributing the price effects of non[-
]subject imports to subject imports").
Although there was no industry consensus on the definitions of
"fast" and "slow" SRAMs, see Staff Report at I-9, the record
adequately supports the Commission’s finding of distinct market
segments for fast and slow SRAMs in the United States,17 see id. at
17
Plaintiffs argue that the Commission cannot legally rely
on its distinct market segment explanation because the Commission
in its original determination had already found no "clear
dividing line" between fast and slow SRAMs in finding a single
"domestic like product" consisting of SRAMs of all access speeds.
See Pls.’ Resp. to Remand Views at 16 (citing Final Determination
Court No. 98-05-01460 Page 39
I-18 ("[I]nterchangeability across SRAMs with different access
speeds can be problematic."). In addition, the record supports the
Commission’s conclusion that the Taiwanese imports and domestic
product were concentrated in the market for faster SRAMs. See id.
at I-10, Table I-1.
The record does not, however, support the Commission’s
apparent finding that non-subject imports were less competitive
than Taiwanese imports in the domestic fast SRAM market. Instead,
the great weight of the record evidence appears to indicate that,
although a substantial portion of non-subject imports were
concentrated in the U.S. market for slower SRAMs, non-subject
imports were also very competitive in the U.S. market for fast
SRAMs.
First, in terms of billions of bits, there were more than
twice as many non-subject imports of fast SRAMs as a whole than
at 10). It is permissible, however, for the Commission to
consider the importance of distinct market segments as a
condition of competition in its analysis of causation despite a
finding of a single domestic like product under 19 U.S.C. §
1677(10). See Bic Corp. v. United States, 21 CIT 448, 452-54,
964 F. Supp. 391, 397-98 (1997); R-M Indus., Inc. v. United
States, 18 CIT 219, 226 n.9, 848 F. Supp. 204, 210 n.9 (1994).
Indeed, an analysis of market segments plays an important role in
the causation context because "the more fungible two products
are, the more likely underselling by one will affect the price of
another." Bic Corp., 21 CIT at 456, 964 F. Supp. at 400.
Court No. 98-05-01460 Page 40
Taiwanese fast SRAM imports in 1997. See Staff Report at I-10,
Table I-1, and at IV-7, Table IV-3. The absolute volume in 1997 of
third source fast SRAMs alone was much greater than those from
Taiwan. See id. Moreover, in the fastest category of SRAMs
(access speeds of 14 ns or less), there were more than three times
as many non-subject imports as Taiwanese imports. See id.
Finally, in 1997, fast non-subject Korean imports constituted 69.7%
of total non-subject Korean imports by value, while fast third
source imports constituted 75.2% of total third source imports by
value. See id. at I-10, Table I-1.
In addition, the record indicates that non-subject imports,
particularly third source, were dominant in cache memory uses--
functions that utilize fast SRAMs. See id. at I-11. For instance,
non-subject imports were dominant in the market for cache memory in
personal computers ("PCs"), "[o]ne of the largest end uses for
SRAMs[.]" Id. at II-3. According to the Staff Report,
"competition in much of the PC cache market [is limited] to those
SRAM suppliers selected by Intel." Id. In turn, Intel purchased
over 90% of its SRAMs from Japanese and non-subject Korean sources
in 1997. See id.; see also id. at II-13. Thus, the record
indicates that non-subject imports were very competitive in the
Court No. 98-05-01460 Page 41
U.S. market for PC cache memory,18 a market that chiefly utilized
SRAMs of the fastest category in 1997. See id. at I-13, Table I-2.
Moreover, the record indicates that the U.S. market for
workstations and servers chiefly utilized SRAMs of the fastest
category in 1997. See id.; see also id. at II-4 ("Workstations and
servers also consume a large amount of SRAM, and account for a
large percentage of the value of SRAM sales. These applications
use very high-end, high-speed SRAMs[.]") and at II-13. Addressing
the sources of products in this market segment, the record states,
"This segment is predominantly supplied by SRAMs produced in the
United States and non-subject imports, particularly from Japan,
although importers of SRAMs from Taiwan reported some shipments in
this category." Id. at II-4; see also id. at II-13. By value,
37.4% of U.S. SRAM shipments in 1997 were used in workstations and
servers, the largest end-use for domestic SRAMs by value. See id.
In contrast, only 1.4% of Taiwanese SRAMs by value were employed in
workstations and servers in the U.S. market in 1997. See id. at
II-2. Thus, the record indicates that non-subject imports were
more competitive than the Taiwanese imports in the domestic
18
Meanwhile, 22.2% of Taiwanese imports by value were used
as PC cache memory in 1997. See Staff Report at II-2, Table II-
1.
Court No. 98-05-01460 Page 42
industry’s greatest end-use market by value, a market that utilized
SRAMs of the fastest category. See also id. at II-9 and at II-12
("Imports from Taiwan are used in a smaller range of end uses than
U.S.-produced SRAMs.").
By contrast, Taiwanese imports by value were concentrated in
the U.S. market for modems and telecommunications applications in
1997, see id. at II-2, Table II-1, end-uses that primarily employ
SRAMs of the next fastest speed category (access speeds of 15-34
ns), see id. at I-13, Table I-2. Even in the 15-34 ns access speed
range, however, the non-subject imports maintained a greater
absolute volume in the U.S. market than the Taiwanese imports. See
id. at I-10, Table I-1, and at IV-7, Table IV-3.
Finally, the record’s discussion of substitution elasticities
also demonstrates that non-subject imports were competitive in the
U.S. market segment for fast SRAMs. The substitution elasticity
"reflects how easily purchasers switch from the U.S. product to the
subject product (or vice versa) when prices change." Staff Report
at II-15 n.29. The record indicates that non-subject, domestic,
and Taiwanese SRAMs were all within the same range of
substitutability with one another, see id. at II-15 and at II-15
n.30; therefore, the record indicates that they were all fungible
with one another. This evidence further undermines the
Court No. 98-05-01460 Page 43
Commission’s distinct market segment finding.
The Court presumes the Commission considered all of the
evidence in the record. See Nat’l Ass’n of Mirror Mfrs. v. United
States, 12 CIT 771, 779, 696 F. Supp. 642, 648 (1988).
Nevertheless, without more, the Court cannot conclude that the
record as a whole supports the Commission’s apparent finding on
remand that non-subject imports were not significantly competitive
in the market segment in which domestic and Taiwanese SRAMs were
concentrated. While the Commission has "discretion to make
reasonable judgments and inferences in interpreting evidence[,]"
Chung Ling, 16 CIT at 846, 805 F. Supp. at 61, it must nevertheless
"examine the relevant data and articulate a satisfactory
explanation for its action . . . [,]" Motor Vehicle Mfg. Ass’n v.
State Farm Mutual Auto Ins. Co., 463 U.S. 29, 43 (1983). Absent
greater explanation, it appears that the Commission "failed to
articulate a ’rational connection between the facts found and the
choice made.’" Bando Chemical, 16 CIT at 136, 787 F. Supp. at 227
(quoting Bowman Transp., Inc. v. Arkansas-Best Freight System,
Inc., 419 U.S. 281, 285 (1974)), aff’d, 26 F.3d 139 (Fed. Cir.
1994).
More specifically, the record also supports the conclusion
that non-subject imports had price depressing effects on domestic
Court No. 98-05-01460 Page 44
prices for newer products 1 and 2, the very products for which the
Commission emphasizes underselling by Taiwanese imports.19 See
Remand Determination at 12. The record indicates that non-subject
Korean imports also undersold the domestic product in products 1
and 2.20 See Prehearing Staff Report (List 2, Doc. 11) at V-5 to
19
In its original determination, the Commission explained
the importance of new SRAM products as follows:
[T]he SRAM market is characterized by the frequent
introduction of more advanced versions or generations
of the domestic like product, which then tend to
replace existing products. The first producer to
market a superior product . . . often enjoys favorable
pricing for a certain period. As other producers enter
the market and production efficiencies are achieved,
however, prices are driven down, and the product in
question changes in character from a high value-added
product to a commodity-type product.
Final Determination at 21-22; see also Staff Report at I-20.
20
Regarding product 1, the record indicates that the
producer of non-subject Korean imports was the first firm to
introduce the product in the United States. See Prehearing Staff
Report at V-5, Table V-1. U.S. firms marketed product 1
domestically four months later; Taiwanese firms marketed product
1 in the United States five months later. See id. That a Korean
firm was the first to market product 1 in the United States
suggests that that firm was the one that could have reasonably
expected to receive a price premium. Moreover, the non-subject
Korean imports entered the U.S. market at a price lower than the
introductory Taiwanese product 1 price and less than one-half of
the introductory domestic price. See id. Although Taiwanese
product 1 subsequently undersold non-subject Korean product 1 in
1996 and 1997, non-subject Korean imports of product 1
substantially outsold the U.S. and Taiwanese product in terms of
volume during these years. See id. at V-5 to V-6, Table V-1.
As explained by the Commission, prices are driven down from
Court No. 98-05-01460 Page 45
V-6, Table V-1, and at V-7, Table V-2 ("Prehearing Staff Report").
Addressing the underselling by the non-subject Korean imports,
the Commission states, "[W]here price comparisons for comparable
speed products are available, they show that Taiwan imports
generally undersold non[-]subject imports." Remand Determination
at 10 (citing Prehearing Staff Report at V-5 to V-6, Table V-1, and
at V-7, Table V-2). The record does indicate that the Taiwanese
imports undersold the domestic product by greater margins than the
non-subject Korean imports. See Prehearing Staff Report at V-5 to
V-6, Table V-1, and at V-7, Table V-2. From this evidence, the
Commission concludes that the Taiwanese imports "tended to put
downward price pressure on both the domestic industry and those
non[-]subject imports with which they competed." Remand
Determination at 10.
The Commission has "discretion to make reasonable judgments
the price premium level as additional suppliers enter the market.
See Final Determination at 22. Consistent with this theory, the
record shows that the sharpest relative price decline in the U.S.
price for product 2 occurred immediately after the introduction
of non-subject Korean product 2. See Prehearing Staff Report at
V-7, Table V-2. In contrast, the relative price declines in U.S.
product 2 during the prior two months--when it only competed with
Taiwanese versions of product 2--were not nearly as great. See
id. The non-subject Korean imports also consistently undersold
U.S. product 2, although by lesser margins than the Taiwanese
product. See id.
Court No. 98-05-01460 Page 46
and inferences in interpreting evidence[.]" Chung Ling, 16 CIT at
846, 805 F. Supp. at 61. The Commission makes this conclusion,
however, in the context of its apparent finding that non-subject
imports were less competitive in the fast SRAM market segment in
which domestic shipments and Taiwanese imports were concentrated.
See Remand Determination at 9-10. As discussed above, the Court
cannot sustain that finding absent greater explanation. Therefore,
inasmuch as the Commission’s determination that the subject imports
had significant price depressing effects relies on its market
segment finding, as explained, the Court cannot sustain this
determination.21
21
For instance, the Commission characterizes third source
imports--those primarily from Japan--as "non-LTFV products from
sources heavily concentrated in the slower [SRAM] range[.]"
Remand Determination at 9. Yet, although the record does not
contain pricing data for third source imports, it does indicate
that these imports were very competitive, if not more competitive
than the Taiwanese imports, in the market for SRAMs selling at
premium prices. For example, regarding the U.S. market for SRAMs
utilized in workstations and servers, the Staff Report states,
Workstations and servers also consume a large amount of
SRAM, and account for a large percentage of the value
of SRAM sales. These applications use very high-end,
high-speed SRAMs that sell for premium prices. This
segment is predominantly supplied by SRAMs produced in
the United States and non-subject imports, particularly
from Japan, although importers of SRAMs from Taiwan
reported some shipments in this category.
Staff Report at II-4 (emphasis added); see also id. at II-13
Court No. 98-05-01460 Page 47
iii) Oversupply
As the Commission points out, demand for SRAMs is a derived
demand and thus not price responsive (i.e., demand for SRAMs is
inelastic). See Remand Determination at 6; see also Staff Report
at II-5 to II-6. Thus, decreasing shifts in supply will tend to
lead to price increases, while increasing shifts in supply will
tend to lead to price decreases. Primarily because the U.S.
industry had misforecast demand, the U.S. SRAM market experienced
undersupply during 1995 and oversupply during 1996 and 1997. See
Staff Report at V-3. Correspondingly, domestic SRAM prices "peaked
in 1995" and "declined significantly" beginning in 1996. See id.
On remand, the Commission continues to acknowledge the oversupply
"caused by the industry’s overestimation of demand" and its price
depressing effects.22 See Remand Determination at 5, 6, and 17.
In the original determination, the Commission recognized the
("Competition between non[-]subject SRAMs and subject imports is
limited in the workstation market due to limited availability of
qualified product for this segment from subject importers.").
22
In Taiwan I, the Court referred to the oversupply
situation as "global oversupply." 23 CIT at , 59 F. Supp. 2d
at 1335. In response, the Commission states on remand that its
"discussion of oversupply was specific to the conditions in the
U.S. market" and did not concern "the level of relative supply
and demand around the world[.]" Remand Determination at 17. The
Court clarifies that it, too, is only concerned with the
oversupply situation in the U.S. market despite its use of the
phrase "global oversupply" in the prior opinion.
Court No. 98-05-01460 Page 48
oversupply situation of 1996-97 as a distinct market force that
caused significant domestic price declines. See Final
Determination at 23, 35, and 37. On remand, the Commission
states, "[T]he record also suggests that global oversupply,
whatever its extent may be, is not an undifferentiated factor whose
influence on the United States market is independent of the
particular importations that actually occur." Remand Determination
at 17. Thus, the Commission apparently continues to conclude that,
despite the oversupply situation, the subject imports themselves
had distinct and significant price depressing effects.
If the Court could sustain the Commission’s determination that
the subject imports themselves had significant price depressing
effects, this inference could be reasonable. As discussed above,
however, see supra pp. 36-46, the Court cannot sustain that
determination inasmuch as it relies on the Commission’s market
segment finding. Because the Commission’s explanation of how it
ensured that it did not attribute the effects of the 1996-97
oversupply period to the Taiwanese imports is tied to its
determination that the Taiwanese imports themselves had significant
price depressing effects, we cannot sustain this explanation at
this time.
Court No. 98-05-01460 Page 49
D. Impact
The statute directs the Commission to examine the consequent
impact of the subject imports on the domestic industry. See 19
U.S.C. § 1677(7)(C)(iii). The Commission must consider "all
relevant economic factors which have a bearing on the state of the
industry in the United States, including but not limited to" those
enumerated. See 19 U.S.C. § 1677(C)(iii); see also supra at n.8.
On remand, the Commission elaborates on its original findings
with regard to the impact factor. See Remand Determination at 18.
As discussed in the original determination, a condition of
competition distinct to the domestic SRAM industry is that it "must
make substantial ongoing investments in the research and
development of new products and process technologies, and make
substantial capital investments to upgrade fabrication equipment
and facilities, in order to maintain competitiveness." Final
Determination at 36. Therefore, the Commission explains, "the
ability of [the domestic] industry to generate income is vital to
its ability to make the ongoing investment necessary to remain
competitive." Remand Determination at 19. For this reason,
although the Commission considered all the factors enumerated in 19
U.S.C. § 1677(7)(C)(iii), it permissibly focused on the U.S.
industry’s operating income, capital expenditures, research and
Court No. 98-05-01460 Page 50
development ("R&D") expenditures.
The record indicates that the domestic industry earned
significantly less operating income in 1996 than in either 1994 or
1995. See Staff Report at VI-7, Table VI-3. In 1997, the industry
suffered operating losses. See id. In its original determination,
the Commission explained that, "[a]s a result of the domestic
industry’s worsening financial condition, it curtailed capital
expenditures in 1997 to a level slightly less than half that of
either 1995 or 1996." Final Determination at 37 (citing Staff
Report at VI-11, Table VI-4). In addition, the Commission pointed
out that "[t]he domestic industry’s [R&D] expenditures also fell
from 1996 to 1997, although the 1997 levels remained higher than in
1994 or 1995." Id. (citing Staff Report at VI-11, Table VI-4). On
remand, the Commission continues to conclude that, because the
industry is heavily dependent on continuing investment, these
economic factors indicate that the U.S. SRAM industry was suffering
present material injury. See Remand Determination at 20.
As the Commission acknowledges, despite the fact that the
domestic industry invested less in capital and R&D in 1997 than the
previous year, it nevertheless invested more in both categories in
1997 than it had in 1994, the beginning of the POI. See Staff
Report at VI-11, Table VI-4. Therefore, it is possible that,
Court No. 98-05-01460 Page 51
rather than investing abnormally low amounts in 1997, the domestic
industry in truth invested abnormally high amounts in 1995-96 due
to its ability to earn substantially more revenue during the
undersupply period of 1994-95. Nonetheless, "the possibility of
drawing two inconsistent conclusions from the evidence does not
prevent an administrative agency’s finding from being supported by
substantial evidence." Consolo v. Federal Maritime Comm’n, 383
U.S. 607, 620 (1966). The record at least reasonably leads to the
conclusion that the domestic industry was suffering material
injury.
The Commission must make a final determination of whether the
domestic industry is materially injured "by reason of" the subject
imports. 19 U.S.C. § 1673d(b)(1). The issue remaining, then, is
whether "’the [subject] imports themselves made a material
contribution to the injury.’" Taiwan I, 23 CIT at , 59 F. Supp.
2d at 1327 (citing Gerald Metals, 22 CIT at , 27 F. Supp. 2d at
1355).
On remand, the Commission first states that the "relationship
between [the confirmed revenue losses for product 5] and industry
operating income [losses] . . . provides perhaps the most direct
possible evidence of the significant effects of subject imports."
Remand Determination at 19. The Commission explains, "For the
Court No. 98-05-01460 Page 52
period 1996-97, the industry’s net operating loss was about $30
million. In virtually the same period, confirmed revenue losses by
U.S. producers to Taiwan imports alone amounted to more than $40
million." Id.
The Commission calculates lost revenues from the equation:
(producer’s initial U.S. price quote - U.S. price quote accepted by
buyer) X (quantity sold).23 Four of the lost revenue allegations
for product 5 had initial price quote dates of "4Q95-1Q97" (i.e.,
the fourth quarter of 1995 through the first quarter of 1997). See
Staff Report at V-27, Table V-8. Domestic prices for product 5,
however, were steadily declining from the fourth quarter of 1995
through the beginning of 1997. See id. at V-13 to V-14, Table V-5.
Moreover, as discussed above, see supra p. 29, other factors were
causing price declines. Consequently, the initial quote for each
4Q95-1Q97 allegation is substantially higher than the accepted
quote, thereby potentially inflating the measurement of revenue
lost due to competition from the subject imports. See id. at V-27,
Table V-8. Combined, the four 4Q95-1Q97 allegations account for
23
For example, assume a U.S. producer initially quotes a
price per unit of $10, but a buyer is able to negotiate the price
down to $5 per unit. Consequently, if the producer sells 20
units to the buyer at the accepted price of $5 per unit, the lost
revenues would equal $100.
Court No. 98-05-01460 Page 53
approximately 94% of all confirmed lost revenue allegations for
product 5. See id.
The Commission concludes that the instances of lost revenues
for product 5 had a significant negative impact on the domestic
industry’s operating income. Absent an explanation of how it was
reasonable to rely on the 4Q95-1Q97 allegations in confirming lost
revenues, however, the Court cannot sustain this conclusion as
supported by substantial evidence.
In addition, the Commission bases its impact determination on
the price depressing effects of the subject imports. The
Commission explains that "the Taiwan underselling had its most
direct influence on U.S. prices and volumes for new products."
Remand Determination at 19. The Commission concludes that the
significant price depressing effects of the subject imports
directly contributed to the domestic industry’s worsening financial
performance in 1996 and 1997. See id. at 19-20. Consequently, the
Commission explains, "The relative inability of the U.S. industry
to gain sales of new products, at expected premium prices, . . .
impair[ed] the U.S. industry’s ability to afford further
investment, since new products should make a disproportionate
contribution to earnings." Id. at 19-20. The Commission concludes
that, because the subject imports significantly contributed to
Court No. 98-05-01460 Page 54
lowering domestic prices levels, the subject imports themselves
made a material contribution to the U.S. industry’s poor financial
condition. See id. at 20-21. As explained above, however, without
more, the Court cannot sustain the Commission’s determination that
the subject imports themselves had significant price depressing
effects. Therefore, we cannot sustain the Commission’s affirmative
injury determination.
Court No. 98-05-01460 Page 55
Conclusion
Absent greater explanation, the Court cannot sustain the
Commission’s determination that the subject imports had significant
price depressing effects inasmuch as the Commission based that
determination on its finding that non-subject imports were less
competitive than the subject imports in the U.S. market for fast
SRAMs. Therefore, the Court cannot sustain the Commission’s
affirmative injury determination. Accordingly, the Commission’s
determination is remanded for reconsideration consistent with this
Court’s opinion. Remand is directed to the entire Commission.
The Commission shall complete its second remand determination
by Friday, May 26, 2000; any comments or responses are due by
Monday, June 12, 2000; and any rebuttal comments are due by
Thursday, June 22, 2000.
Donald C. Pogue
Judge
Dated: April 11, 2000
New York, New York